Livingstone’s reputation tainted but likely to stay CBA chairwoman

The 24-hour trial by royal commission of Catherine Livingstone has ended, with the Commonwealth Bank reporting mixed ­success in its no-expense-spared bid to save the reputation of its chairman.

There’s no more decorated company director in Australia than Livingstone, who has led the peak lobby group the Business Council of Australia, chaired both Telstra and the CSIRO, acted as a director of Macquarie Group and Goodman Fielder, and taken Cochlear to the world as the ear implant maker’s chief executive.

A lifetime of achievement was put on the line when the 63-year old entered the witness box on Tuesday afternoon.

The short report card on her performance since is that Livingstone’s record has been tainted, but it’s highly unlikely to cost her the CBA chair’s job ­because the momentum for much-­needed internal change has been building.

The longer version is that some embarrassing weaknesses have been exposed in her relatively short time as a director, particularly in the vulnerable period after she joined the board in March 2016 when the full extent of the disaster she’d signed up for ­became clear.

With red audit lights flashing as the bank grappled with its failing anti-money-laundering systems, Livingstone’s follow-up was tentative at best and completely ineffectual at worst.

As senior counsel assisting Rowena Orr probed late on Tuesday, Livingstone floundered, ­responding with some key admissions and buck-passing.

Asked what she and other members of the CBA audit committee had done to hold management to account and create a sense of urgency, she responded: “There were always responses: ‘Yes, we’re doing this. Yes, we’re spending that money.’ So those responses were taken as assurance that the issue was being ­addressed, but I absolutely accept that was an inadequate conclusion on the part of the audit committee and the board.”

Orr twisted the knife, noting no sense of urgency was conveyed in the minutes of the meeting.

It wouldn’t be the last time that Livingstone took refuge in incomplete minutes of various meetings, even though the law requires a full account of key exchanges.

After brooding overnight and refreshing her memory, the CBA chair yesterday re-entered the witness box, determined to set the record straight.

Livingstone said she directly challenged management about the bank’s anti-money-laundering controls in the October 2016 meeting, when the directors had discussed a regulatory report.

Again, though, when Orr took Livingstone to the minutes, there was no record of her challenge.

It was after the October 2016 meeting that the directors elected Livingstone to the position of chair, effective from January 1, after the surprise resignation of David Turner.

By that stage, the full scale of CBA’s challenges was becoming clear.

The bank had received three statutory notices from Austrac, red internal audit lights were flashing on anti-money-laundering compliance, ASIC released a report on systemic industry charging of fees for no service where CBA was the main culprit, the prudential regulator had put out reviews requiring action on IT services and internal risk, and the bank would suffer a record “no” against its remuneration report at the November annual meeting.

“What I did, from January 1, 2017, is put my reputation on the line, take up the role of chair of CBA and its responsibilities, but more importantly its accountability for leading the fundamental change that had to be made in the way CBA operates,” she said.

Livingstone was permitted to boast she had restructured the board, overhauled remuneration, brought non-financial risks to the forefront and was overseeing the implementation of the APRA ­report. But there’s still a long way to go, and Livingstone would be the first to admit it.